If 2025 is the first year, September is when the design starts.

August 31 is the edge of the window, not the middle of it. Owners who want a defined benefit or cash balance plan for 2025 often surface now, after the summer numbers are real and before the fourth quarter becomes a tax projection. That timing can work. It works if September is treated as the start of the design, not as a month for gathering thoughts. A plan is a document, a census, a valuation range, a trust, and a deposit. Each of those has a person attached. None of them is a paragraph in a December email to the CPA.

The ordinary adoption target is the last day of the employer's tax year. For a calendar-year practice, that is December 31, 2025. A plan adopted later can, under the SECURE Act, sometimes be treated as adopted on the last day of the year if it is signed by the due date of the employer's return, including extensions. That later date is real, and it is a poor operating plan. Employee deferrals generally cannot be taken from paychecks that were already paid before a 401(k) exists. A defined benefit formula still has to be valued from a real census. An Enrolled Actuary who is handed a new plan in March, during filing season, is being asked to certify a year that was never designed. September is when the work starts if 2025 is going to be the first year you can defend.

Sterling Pension Group is a third-party administrator in West Hartford. We coordinate independent Enrolled Actuaries. We are not an actuarial firm. We can still open a 2025 design in September. We cannot do it well if the first complete census arrives in December. This briefing is not tax, legal, or actuarial advice.

What has to exist before anyone adopts

The entity has to be named correctly. A sole proprietor, a partnership, an S corporation, and a C corporation do not feed a plan the same compensation. If you are an S corporation, the plan will see W-2 wages, not distributions. If you have been paying yourself a thin wage and a thick distribution, September is when the CPA decides whether the remaining payroll of 2025 can support the plan you want. There are not many pay periods left. A wage that is not run through payroll will not become compensation because the plan document wishes it would.

The census has to include everyone the statute sees, not everyone you think of as the team. Dates of birth, hire dates, hours, compensation, ownership, and other businesses under common control are the minimum. A spouse on payroll is a participant question, not a footnote. A related clinic is a coverage question. A design illustrated on the owners alone, when employees exist, is a different plan from the one you would sign. Build the list in September so October can be about the formula rather than about discovering the list.

The contribution has to be a range from an Enrolled Actuary, labeled as a range. A sketch that says a 57-year-old at the compensation cap "can do about" a large dollar figure is a conversation starter. It is not a number to give the estimated-tax calculation. For 2025 the compensation cap is $350,000. The defined benefit dollar limit is an annual benefit of $280,000, not a contribution cap, and it is reduced for early payment and short participation. The IRS states those reductions on its benefit limits page. Any contribution figure in a September meeting is illustrative. It becomes a certified minimum and maximum only when the actuary values the plan you actually adopted, on the census you actually had.

If a 401(k) will sit beside the pension, decide that in September too. The elective deferral limit for 2025 is $23,500. The catch-up is $7,500, or $11,250 for ages 60 through 63, and the higher catch-up replaces the $7,500. Annual additions other than catch-up are $70,000. Those limits are in IR-2024-285 and on the IRS COLA page. Deferrals have to be elected from wages not yet paid. A combination designed in December can still include employer profit-sharing. It will have missed most of the deferral opportunity for 2025 if the payroll of 2025 is already behind you. Publication 560 is the IRS tour of the plan types you are choosing among. Read it before you ask a pension to do a profit-sharing job.

The sequence that fits in four months

September is for facts and for a decision to proceed. Entity, compensation that can still be paid, census, other employers, and a clear statement of whether income is stable enough to fund a promise in 2026 as well as 2025. A plan adopted for a single large year and regretted in the next is a common and expensive pattern. If the work is uneven, say so now. A smaller credit, or a decision that this is not the year, is a successful September.

October is for the formula. Pay credits or an accrual rate, an interest crediting rate, eligibility, and the staff contribution the tests require. Two illustrations that differ on purpose are more useful than one illustration that tries to be the maximum. The illustration set should show the rate and the census date. A cash balance plan and a traditional defined benefit plan are both still available as structures. The choice is about how you want the promise described and funded, not about which one has the larger unofficial number.

November is for the document, the trust, the custodian, and the CPA's view of the deduction. The document has to match the formula the actuary priced. The trust has to exist before a deposit is made into it. The CPA has to know which year's return the deposit is meant to support, and whether section 404(a)(6) will be relevant next year when you are funding on the extended return. For many practices the first deposit for a 2025 plan is made in 2025 before year-end, or in 2026 by the due date of the 2025 return, including extensions. Minimum funding for a calendar-year defined benefit plan is generally due September 15 of the following year, which for the 2025 plan year is September 15, 2026. That date is not a reason to delay the design until then. It is a reason to know, before you adopt, that a minimum will exist and that a 10 percent excise tax on Form 5330 follows a miss. The deadline calendar should get the adoption target and the funding target as separate lines.

December is for signing and for any remaining payroll. It is a bad month for discovering a controlled group. It is an acceptable month for a signature if the prior three months happened. Holiday weeks remove business days you think you still have. Actuaries, custodians, and attorneys take time off. A complete file delivered on December 15 is not the same as a complete file delivered on December 30.

The SECURE Act's later adoption date sits behind this sequence as a backstop, not as the plan. If a document is ready and a signature slips into January, ask counsel and the CPA whether the backstop applies to your entity and your plan type before you rely on it. Do not aim at it. And do not expect it to create retroactive 401(k) deferrals from compensation already paid. Employer-funded pension accruals and employee deferrals are on different clocks.

Who is in the room

You are in the room, with the authority to adopt. The CPA is in the room, because a plan that cannot be deducted on the return you file is a different economic decision. The Enrolled Actuary is in the room, at least by work product, before the document is signed. We are in the room to assemble the census, coordinate the document, and keep the other three from designing three different plans. The investment adviser should know the crediting rate before the portfolio is built around a rate nobody stated. Counsel is in the room when the employer is a set of entities, a partnership with a difficult agreement, or a professional practice that is not sure who its employees are.

A self-employed owner with no staff has the shortest version of this sequence, not a skip. Compensation is still a calculation. The actuary is still required. The document is still a document. The absence of testing does not remove the funding obligation. An owner with staff has the longer version, and September without a payroll register is a month wasted.

If you already know the year will not support a pension, a defined contribution plan alone may still be available, and it may be the better 2025 decision. The point of starting in September is to make that choice while both options are real. The point is not to force a defined benefit adoption because the calendar feels urgent. Urgency is a reason to start the facts. It is not a reason to skip them. The July briefing on comparing the illustration to payroll is the same discipline, applied to plans that already exist. For a first-year plan, the illustration and the payroll should be built together the first time.

What September will not do

September will not raise the 2025 limits. They are what IR-2024-285 said they were. September will not make a distribution into wages. September will not make a plan exempt from PBGC coverage because the practice is small. Many professional-service employers with 25 or fewer active participants are exempt, and many owner-only plans are exempt because they cover only substantial owners. Some plans that look like those plans are covered. Coverage is a separate question, asked before the first premium year surprises you.

September will not produce a certified deduction. Certification follows a signed plan and a finished year, or an earlier valuation the actuary is willing to stand behind as a range. Anyone who gives you a deductible maximum as a single dollar, without a census and without an enrolled name, is estimating. Estimates can be responsible. They should be dated and replaced.

September will also not wait. A four-month sequence that starts in October is a three-month sequence. Start in November and you are asking for a document in a month that includes Thanksgiving, with a valuation still ahead of it. Some of those files get done. They get done by simplifying the design, not by speeding up the statute. If your facts are a controlled group plus a spouse plus uneven income, you do not have a simple file. Begin while the simplification is still a choice.

What to do in the next two weeks

Decide whether you want a 2025 plan enough to assemble facts in September, or whether you are curious. Curiosity can wait until a quieter month and a 2026 plan year. A 2025 plan cannot.

If you want it, send four things: the entity type, a payroll register or a year-to-date income statement, every owner's date of birth, and a list of other businesses and employees. State the compensation you can still pay as wages or earned income before year-end. State whether you need employee deferrals for 2025 or only an employer-funded benefit.

Ask your CPA, in the same two weeks, whether the practice can fund a repeating contribution and which return would take the deduction. Then start the design conversation. We will tell you whether September still leaves a responsible path to a signed 2025 plan, or whether the honest answer is to prepare for a later year. Both answers are useful. A December surprise is not.